Alaska governor proposes $355 million LNG investment

Sat Dec 8, 2012 1:37pm EST
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By Yereth Rosen

ANCHORAGE, Alaska Dec 8 (Reuters) - Alaska's governor he will introduce legislation allowing the state to provide $355 million in seed money for a liquefied natural gas project that promoters hope will eventually ship North Slope natural gas to Asian markets.

Governor Sean Parnell said on Friday his plan is to provide state funding to help build a gas-liquefaction plant on the North Slope and a distribution system to bring LNG to the Fairbanks-area market. He proposes to authorize $275 million in bonds, to seek $50 million in direct general-fund appropriations and to allow $30 million in tax credits through an incentive program already in state law.

The plan envisions a North Slope liquefaction plant with an annual capacity of 9 bcf but expandable to 20 bcf, according to supporting documents provided by the governor's office. The cost of that facility would be $220 million, said Sharon Leighow, Parnell's spokeswoman.

LNG processed at the plant would be delivered by truck to Fairbanks, with a target date of late 2015 for first shipments, under the proposal.

Putting state money into a preliminary system delivering LNG to in-state markets could ultimately convince the private sector to follow through with a pipeline system allowing long-desired exports of North Slope natural gas, Leighow said.

"If you have the gas distribution system in place and you have the infrastructure and you have the customers, that helps when we get the gas line in," she said.

Some of the governor's plan will be embedded in the budget that he will unveil on Dec. 14, Leighow said. The state legislative session starts on Jan. 15.

Alaska's North Slope holds about 35 trillion cubic feet of proven natural gas and is believed to hold much more in undiscovered reserves. That natural gas has remained stranded on the North Slope, because any pipeline delivery system to deliver to markets has, so far, proved too costly and elusive.   Continued...